There’s a CFO crisis in the global economy. According to a 2015 study published by KPMG, 2/3 of surveyed CEOs believe that CFOs will increase in their significance over the next three years (which, incidentally, they have). Yet, 1/3 of those CEOs feel that their CFO is not up to the challenge.
Now, this might not sound like news- CEOs putting pressure on CFOs is certainly not an unprecedented 21st century phenomenon- but it’s not just the CEOs of the world demanding more of Chief Financial Officers. It’s everyone.
There was a time when the role of the CFO was grounded in risk aversion and crisis management. They were the ones maximizing company resources, monitoring cash flow, and tempering the large-scale visions of more creative executives to ensure longevity and stability.
In 2020, however, the scope of a CFOs role is radically different. CFOs are now getting wrangled into more public-facing responsibilities, developing equal partnerships wit CEOs, and taking an active role in day-to-day operational management according to longterm strategic policy.
Why? Because companies who don’t lean on their CFOs fall flat.
The massive shift in responsibility stems from an unpredictable economic landscape. The terrain of our global marketplace is indeed changing at an accelerated rate, not in the least because of COVID-19 and its monumental financial disruption. Growth and longevity for businesses demand greater financial risk. The marketplace is much more volatile, and technology has globalized every industry out there, which deepens, expands, and complicates market niches and competition. The entrance of advanced technology, among other factors, has created a need for what KPMG has coined, “the Renaissance CFO.”
The Modern CFO and the Evolving Expectations of 2020
What does this modern, 21st century CFO look like? They bring much more creativity, communication, and technological skillsets to the table. CFOs are no longer just accountants. They are a partner to the CEO, a vocal leader of an organization, and an action-based executive within the context of a company’s structure. What was once the highlight of a CFO’s resume – extensive financial management and accounting experience – is now a minimum requirement to take on a CFO role. In fact, a strong accounting and ERP system management background holds no guarantees.
President and CFO Search Practice Managing Partner of Cowen Partners Executive Search, Shawn Cole, stated, “there is an evolution taking place. While CFOs with ERP experience have been in demand for a long time, ERP experience is now a prerequisite, not unlike an accounting or finance degree. Many of the CFOs we are placing are inheriting ERP selection and implementation initiatives at their new companies as part of their company’s data automation, analytics, and forecasting goals.”
Technology has permeated every facet of commerce and generated increased opportunities for gains and losses. It determines everything from advertising and marketing to sales to internal operations, and it has the potential to make or break a company. Today’s unpredictable technology-driven market means that companies need to constantly cultivate stronger connections in between departments that result in more strategic and organized operations. CFOs play an integral role in cohesive company management.
Even more importantly, CEOs are looking for someone who understands how to leverage technology to improve data analysis, strategy development, risk management, and communication within departments. They want to see a CFO to bring a wealth of both financial and non-financial expertise, innate creativity, and technological prowess to the table. They expect CFOs to use their abilities to implement meaningful, data-driven, and company-wide initiatives.
Additionally, CEOs need CFOs that understand the global, changing market. They want CFOs that can use their understanding of emerging markets and new industry players to adapt and modify company strategy at a moment’s notice. Flexibility, creativity, and craftiness are three of the most in-demand soft skillsets to bring to a CFO role in 2020. Albeit a far cry from the isolated financial expertise of traditional CFOs, these abilities are crucial when it comes to crisis management and successful growth strategy. You can have decades of diverse financial management experience and get nowhere near a CFO office in today’s economic climate because it won’t mean anything without the ability to modify it in the face of new competitors.
CFOs face the enormous task of acting as a bridge between daily operations, long-term strategy, and financial goals. The role of a CFO is no longer about signing off on expenses and monitoring budgetary concerns. Rather, the modern CFO has to look at their company’s cash flow, analyze it with effective and cutting-edge technologies, and work collaboratively with other executives to develop short-term and long-term plans that safeguard a company’s assets without compromising on a CEO’s vision. A CFO of 2020 needs to embody the detail-oriented and data-driven CFO of the past while embracing the volatility and international nature of today’s 21st century markets.
While the task of becoming a modern CFO may seem daunting, the role has never been more exciting, engaging, or unlimited in its potential to make a tangible impact on company growth and performance.